Accused persons in a supposed $18 million cryptocurrency mining fraud case are seeking to have the case filed by the U.S. securities regulator thrown out, arguing in court that cryptocurrencies do not fall within the purview of the regulator.
On the 19th of May, separate motions were lodged by Wright Thurston and Kristoffer Krohn to dismiss the lawsuit initiated by the Securities and Exchange Commission (SEC).
Alleged Fraudulent Offerings
Along with the supposed crypto mining and development company Green United LLC, the SEC accused the duo in March of deceptively offering securities through the sale of “Green Boxes” and “Green Nodes,” which were marketed as miners for the GREEN token on the so-called “Green Blockchain.”
Thurston established the business and was contractually promoted by Krohn.
In their appeal for dismissing the lawsuit, Thurston and Krohn assert that the SEC lacks jurisdiction over the digital asset space, adding that Congress had “examined and dismissed” the SEC’s jurisdiction over crypto.
They further argued that the SEC has been “ambiguous and inconsistent” in defining cryptocurrency and echoed recent views that the regulator was conducting “regulation by enforcement.”
Allegations and Denials
In addition to these assertions, the pair contested that the SEC had not proved that the Green Boxes were securities offerings or “investment contracts,” as the regulator had claimed in its March complaint.
In its March lawsuit, the SEC alleged that the hardware sold by Green United was, in reality, Bitcoin mining rigs that did not mine GREEN as advertised, and the supposed blockchain did not exist.
The regulator reported that the alleged operation amassed approximately $18 million, and investors “failed to receive” any of the BTC mined by Green United.
Long-standing SEC Chair Gary Gensler has consistently upheld the Commission’s authority over crypto, stating that most crypto assets, apart from Bitcoin, are securities under the Howey test.